The International Monetary Fund says household debt in Canada is still too high to pursue policy changes to encourage more activity in housing markets.

The organization’s report comes on the heels of Conservative Leader Andrew Scheer’s pledge last week to rework the Liberal’s mortgage stress test to make home-buying more affordable for Canadians.

The IMF, however, says it would be “ill-advised” to stimulate activity in the sector, suggesting Canada aim instead for a gradual slowdown in overheated real estate markets to reduce risk to the economy.

The report by the organization’s staff following an official visit to Canada calls for policy priorities that focus on ensuring a sound financial system, enhanced cooperation between federal and provincial governments and structural reforms that target productivity growth.

The tightened mortgage rules, brought in by Finance Minister Bill Morneau, mandated would-be borrowers undergo a stress test to determine whether they could still make payments if faced with higher interest rates or less income.

In a report last month that calls for a rethinking of the mortgage stress test, CIBC economist Benjamin Tal estimated the measure accounted for more than half of a $25-billion or eight per cent drop in new mortgages started last year.

“The government is under pressure to ease macroprudential policy or introduce new initiatives that buttress housing activity,” said the IMF in its report.

“This would be ill-advised, as household debt remains high and a gradual slowdown in the housing market is desirable to reduce vulnerabilities.”